What Happened?
Shares of aircraft leasing company FTAI Aviation (NASDAQ:FTAI) fell 7.4% in the afternoon session after Muddy Waters, a research firm known for short reports and bets that stocks are overvalued, published a report on FTAI. Muddy Waters claims that FTAI Aviation has been recording one-time engine sales as Maintenance Repair & Overhaul (MRO) revenue in its Aerospace Products (AP) segment. This has led to a growth story in FTAI's AP revenue, which Muddy Waters believes is lower quality than investors give the company credit for. The research firm estimates that the majority of FTAI Aviation's adjusted EBITDA in the Aerospace Products segment comes from gains on sales, which is less recurring in nature.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy FTAI Aviation? Access our full analysis report here, it’s free.
What The Market Is Telling Us
FTAI Aviation’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 6.3% on the news that Wolfe analyst Myles Walton upgraded the stock's rating from Hold to Buy and assigned a price target of $190. The new price target represents a potential 10% upside from where shares traded before the upgrade was announced. The upgrade is based on the potential for earnings to increase as the analyst discounted some initial concerns regarding the business following the announcement of FTAI's strategic Capital Investment in the previous week.
FTAI Aviation is down 22.6% since the beginning of the year, and at $111.47 per share, it is trading 36.3% below its 52-week high of $174.96 from November 2024. Investors who bought $1,000 worth of FTAI Aviation’s shares 5 years ago would now be looking at an investment worth $5,939.
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